Innovating in Financial Meltdown

The first recession which my generation saw was that when the IT bubble had burst. There was chaos in the industry but IT was the one which was crumbling while most of the industries sat back taking the view from the window. It was like a rib of the rib-cage was fractured , which people knew will heal.

The second which my generation is seeing is extra-ordinary by all measures. Its the meltdown of the financial system across the world. The backbone has crumbled this time ..its not a rib but the vital element which holds the rib-cage has been shaken ( and seems to be fractured at multiple positions) badly.

Considering this , why should companies still focus on investing in R&D activities at steady pace. The reason lies not in today but in the past, the history has a lesson already written which we will have to re-visit. History speaks for itself how great companies of today ( GE , HP, Disney, Microsoft ) have emerged from the toughest financial times ever.

If we look across the literature available we have clear evidences that , some companies who continued to invest in innovating , even in the extremely difficult times, have gone ahead to re-define a successful business. How did they do it?

They realised the time scale gap which exists between an innovation and commercialization of it.
You innovate today, it will take lets assume may be 2 years before you go commercial on it and reap the profits of your R&D investments. So here is your chance to go ahead. When others may cut down their R&D spending we can keep ours at steady pace or even boost if we are cash rich.
Innovate on time and in the due course you take the technological wonder to market which is already shining bright coming out of the financial jitters.

Then is when the "First to Market" makes a whole lot of sense. You enter first, you raise the bar, you set the expectation of the customer. You are already ahead ( may be already a winner )of the competition.

Its a fact that delay will be the natural response to market uncertainty but companies that delay these investments will loose significant growth opportunities when the economy recovers.

The Depression-era economist Joseph Schumpeter emphasized the positive consequences of downturns: "the destruction of underperforming companies, the release of capital from dying sectors to new industries, and the movement of high-quality, skilled workers toward stronger employers. For companies with cash and ideas, history shows that downturns can provide enormous strategic opportunity"

Thought it has to be noted that R&D investments for innovation in the past during difficult financial times that the market saw is not universally wise today, so marketers are the key to let you recognize the emerging growth pockets fueling the growth of the business.